A crypto exchange is a place where customers can trade digital currencies for other assets. It is where buyers and sellers conduct their business. A seller of a Bitcoin or all any coin deposits funds with the exchanges address. He can then use his positive balance to sell his digital money for fiat currency. Similarly, a buyer of cryptocurrency can deposit US dollars with the exchanging and then use the balance to buy bitcoins Ethereum, or whatever else. For those, who want to trade more professionally need to use an exchange that requires you to verify your ID. If you want to make the occasional straightforward trade, or by just a small amount, you can also find platforms that don’t require you to verify your identification.
Real exchanges are just a medium between traders. People can set limit orders to buy/sell crypto for a certain price. The exchange will math buyers and seller, where condition of both the buyer and seller are met.
it’s the only place, where you can exchange fiat currency with using credit cards, debit cards, bank transfers, to convert it into cryptocurrency you need. If you have the coins, you can move it from exchange to exchange wallet.
Types of exchange
There are really two types of crypto currency exchanges, a traditional crypto currency (centralized) exchange and decentralized crypto exchanges.
For most crypto assets, the centralized crypto exchanging is one of the most important for making transactions. It’s internet platforms, working for buying and selling, or exchange digital currencies. Centralized exchanges can be used for making trades from cash-to-cryptocurrency, or between two different cryptocurrencies. Decentralized exchanges allow peer- to-peer crypto trading Because users do not need to transfer their funds to the exchange, decentralized exchanges reduce the risk of hacking.
Trading platforms. These are websites, the connect buyers and sellers, and take a fee from each transaction.
Direct trading. This platform offers direct person to person trading where individuals from different countries can exchange currency. Direct trading exchanges don’t have fixed market price, instead, each seller sets their own exchange rate.
Brokers. There are websites that anyone can visit to buy cryptocurrency at a price set by a broker. They are similar to foreign exchanging dealers.
Things to look out before joining an exchange
Reputation. The best way to find out about an exchanging is to search from reviews from individual users and well-knows websites.
Fees. Before joining, make sure you understand deposit, transaction and withdrawals fees. Most exchanges should have fee related information on their websites.
Payment Method. What payment method is available on the website (credit, debit card, PayPal)
Types of orders
Limit order allow a trader to buy cryptocurrency at a price lower than the current price or sell higher than the current price. However, these orders can be executed once another user accept them.
Market order will just find the best matching limit order.